Sunrise and Salt team for $3.1B Swiss fiber push

Sunrise and Iliad-owned Salt, the two competitors to Swiss market leader Swisscom, have joined forces in an effort to improve access to fiber-based broadband services throughout Switzerland.

The operators have formed Swiss Open Fiber as a joint venture (JV) company, with the aim of building a fiber-to-the-home (FTTH) network covering 1.5 million households over the next five to seven years. Total investment is expected to be up to CHF3 billion (US$3.1 billion), financed through a mix of debt and equity from a financial partner and wholesale revenue from tenants.

Salt and Sunrise will retain equal minority stakes in the JV, with an as-yet unknown third party holding a further minority stake. The companies said they are in "advanced discussions" with construction partners, potential equity partners and financing banks, and they expect rollout to start in the fourth quarter of 2020. The new chairman of the JV is Marc Furrer, the former president of the Federal Communications Commission (ComCom).

The rationale behind the move appears twofold: to improve FTTH penetration in Switzerland and to ensure that Swisscom does not gain a de facto monopoly over fiber access. The former incumbent said in February 2020 that it aimed to double its FTTH coverage by 2025. Salt and Sunrise said of the total 5 million homes passed in Switzerland, fewer than half have access to FTTH. Around a third of the country is said to be covered with FTTH, but with significant discrepancies at the local level. The mid-term goal is to improve Switzerland's FTTH penetration rate from around 30% to over 70%.

Swiss Open Fiber intends to focus on undersupplied low-to-medium density areas and will take an "opportunistic approach" to more densely covered urban areas. The two partners stressed that the FTTH network will be open to all retail providers, including Swisscom, although Salt and Sunrise will act as anchor tenants under long-term wholesale agreements. Swiss Open Fiber will also collaborate with Swiss Fibre Net, which will provide an FTTH provisioning platform and help with setup and commercialization of the service.

Furrer said: "In 2008 we initiated the round-table, with which we achieved FTTH deployment to around one third of the Swiss population. Now we want that the rest of Switzerland can benefit from high-quality FTTH products, which are essential for home office, home schooling and home entertainment. The planned joint venture will bring this high-speed connectivity to most of the remaining market while ensuring infrastructure competition. The investments of up to CHF 3 billion will also give an impulse to the Swiss economy."